Being a guarantor

Here's the gist

It may be difficult to get a loan after finishing school or college because you may not have a credit score. This gives lenders an idea of how likely you are to repay anything you borrow. It’s based on your track record of using credit and managing your finances.

If you don’t have a credit score, or had late or missed payments, you may need a guarantor. A guarantor will take on the financial risk of a loan or rental agreement. They should understand the legal considerations.

How it works

What is a guarantor loan?

A guarantor loan is like a joint loan. It will include the name of a person willing to ‘guarantee’ the repayment if you can’t pay it back. Both the borrower and the guarantor are responsible for meeting the payments. The interest rate may be higher than a standard repayment loan.

Who can be a guarantor?

Your guarantor will need to be over the age of 21 and under 75 years old. They’ll need to have a good credit history. And be able to show that they can repay the debt if you can’t.

  • Your guarantor can be anyone you are NOT financially linked to.
  • They can’t be a spouse, civil partner, business partner or anyone you share a bank account with.
  • As the borrower, you need to be over 18 and hold a UK bank account.

Need to know

  • A guarantor is legally responsible for repaying the loan if the borrower does not pay. If it’s not paid back, your lender will look to take legal action. This can affect your credit score.
  • A guarantor will have the legal responsibility for the length of the loan agreement.
  • A guarantor should always review the loan or tenancy agreement thoroughly before signing it.

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